Border Cities Program
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How the Program Can Help Your Business
There are 5 communities in Minnesota that are designed border cities (East Grand Forks, Moorhead, Ortonville, Breckenridge, and Dilworth). Within this designation, we are able to provide various benefits to commercial, industrial, and some apartments.
How the Process Works
Submittal
Work with the EDA Director and Board to gather the required applications, forms, business info.
Public Hearing/Notice to Competitors
A public notice is issued through the local newspaper to potential competitors to speak their mind at a City Council public hearing.
DEED Review
Department of Employee and Economic Development review your application, and required procedural docs to make a determination.
Determination
If approved, the Dept of Revenue issues a tax credit form and DEED sends back your application with leadership execution. You are able to claim your credits.
Disparity Reduction Credit Program
This property tax reduction for businesses (commercial, industrial, and some apartments) per MN Statute 273.1398, subdiv 4. whereby reducing your property taxation rate down to roughly 1.6%*, as compared to North Dakota's 3% property tax rate. Your business's property tax bill should indicate "credit(s)" to show this Disparity Reduction. If it is missing, contact Sam Melbye- Polk Co. Tax Auditor- sam.melbye@co.polk for assistance.
*estimated using currant tax rates and based on current legislation.
Expansion/New Facilities Tax Reduction
Most of East Grand Forks is designated as an enterprise zone. If your business is looking to expand and make a large investment towards the growth of your business, this reduction might be a good option to consider. Should your business choose to pursue this additional reduction, it would further reduce your property tax burden lower than 1.6% -or- reduce your income tax rate pending the final consensus of the EDA Board & City Council.
How the process typically works and what to consider:
- Application, information sharing authorization form, narrative on needs & capacity are submittal
- A public notice to competitors and public hearing are filed with the local paper
- For investments of $25k- $149k, no public hearing is required
- For investments of $150k + a public hearing is required
- For investments of $200k + all new positions created must be listed on CareerForce/MinnesotaWorks.com
- For investments of $500k + prevailing wage reporting is required
- DEED reviews the request
- If approved, Dept of Revenue issues a tax clearance letter
- To claim this reduction, you'll use the Enterprise Zone Credit form and tax clearance letter
Items must be submitted by Oct 1st to be considered for the reduction or it'll need to wait until next year.
Worker's Compensation Credit
The EDA is working to add this use of the tax credits to reduce the cost burden to local employers worker's compensation expenses. Details are being worked out. Please stay tuned for updates on this. Have a business in Moorhead, MN? Contact Amy Thorpe about applying for their worker's compensation credits. https://apps.cityofmoorhead.com/workersCompTaxCredit/overview/
SEED Capital Investment Credit (temporarily unavailable)
The state offers a 45% tax credit to angel investors and is designed to encourage the investment of startups within the Enterprise Zone.
- A business would apply to the program to be certified.
- Once certified an investor would invest in the business
- Provide proof that the investment was made, its impacts, on or after the certificate effective date
- Business must remain open for at least 3 years
- Entire investment must be used for plant, equipment, R&D, marketing/sales, or working capital
- DEED will issue certificate for the investor to claim 45% of investment on their individual tax return, not refundable, but reduces the tax liability forward up to 4 years.
- Only an individual estate, or trust is allowed to claim the credit. For an investment that is made by a pass-through entity, the credits will flow to the members in proportion to their respective interests in the pass-through entity.
Required Qualifications
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- Must be primary sector (does not include REIT) with labor adds value to a product, process, or service and increases revenues to a Minnesota business generated by sales of products or services to customers outside of the state or increases revenues to a qualified business the customers of which previously were unable to acquire, or had limited availability of the product or service from a Minnesota provider.
- Is incorporated or its satellite operation is incorporated as a for-profit corporation or is a partnership, limited partnership, limited liability company, limited liability partnership, or joint venture;
- Is in compliance with the requirements for filings with the commissioner of commerce under the securities laws of this state;
- Has Minnesota residents as a majority of its employees in its principal officer or the satellite operation, which is located in a border city;
- Has its principal office in a border city and has the majority of it’s business activity performed in a border city, except sales activity, or has a significant operation in a border city that has or is projected to have more than ten employees or $150,000 of sales annually; and
- Relies on innovation, research, or the development of a new products and processes in its plans for growth and profitability
Exclusion: A taxpayer who owns a controlling interest in the qualified business or who receives more than 50 percent of the taxpayer’s gross annual income from the qualified business is not entitled to a credit. Nor are their family members. Investments placed in escrow do not qualify for the credit.
